CISI UAE FRR DIFC & ADGM Regulatory Environment 6 — Questions and Answers
Question 1: Under DFSA regulations, a 'Passported Firm' from another recognised jurisdiction can:
- Conduct specified financial services in the DIFC under a streamlined notification process (Correct answer)
- Operate without any DFSA oversight
- Conduct any financial activities without restriction
- Replace its home regulator with the DFSA entirely
Correct answer: Conduct specified financial services in the DIFC under a streamlined notification process
Recognised passporting arrangements allow firms from jurisdictions with equivalent regulatory standards to provide specified services in the DIFC following a streamlined notification, reducing duplication of full authorisation.
Question 2: The ADGM's 'Courts' can enforce judgments in the UAE onshore courts through:
- Recognition and enforcement arrangements between ADGM Courts and UAE federal courts (Correct answer)
- Automatic enforcement without any further process
- Direct execution by ADGM authorities in onshore UAE
- Only through re-litigation in UAE federal courts
Correct answer: Recognition and enforcement arrangements between ADGM Courts and UAE federal courts
Recognition and enforcement arrangements enable ADGM Court judgments to be recognised and enforced through UAE federal courts, making ADGM Court decisions practically effective across the UAE.
Question 3: Under DFSA's conduct rules, a 'cold calling' prohibition means:
- Unsolicited real-time communications to retail clients for investment products are restricted (Correct answer)
- All telephone marketing is banned
- Only in-person unsolicited approaches are prohibited
- Cold calling is permitted for professional clients only after hours
Correct answer: Unsolicited real-time communications to retail clients for investment products are restricted
Unsolicited real-time communications (calls, visits) to retail clients promoting investment products are restricted under DFSA conduct rules to protect consumers from high-pressure sales tactics.
Question 4: The DIFC's 'Arbitration Centre' (DIAC) provides:
- International commercial arbitration services under DIAC Rules based on UNCITRAL Model Law (Correct answer)
- Criminal arbitration for financial fraud cases
- Mandatory arbitration for all DIFC employment disputes
- Shariah-based arbitration exclusively
Correct answer: International commercial arbitration services under DIAC Rules based on UNCITRAL Model Law
The DIFC-LCIA Arbitration Centre (now DIAC) provides international commercial arbitration under its rules inspired by international standards, offering an attractive dispute resolution forum for parties choosing DIFC as their arbitral seat.
Question 5: Under ADGM regulations, 'digital investment management' (robo-advisory) services are:
- Regulated financial services requiring FSRA authorisation under the Investment Management category (Correct answer)
- Exempt from regulation as they use automated technology
- Regulated as technology services rather than financial services
- Permitted only as ancillary services to a licensed bank
Correct answer: Regulated financial services requiring FSRA authorisation under the Investment Management category
Robo-advisory and digital investment management services constitute regulated investment management activities under ADGM rules regardless of whether delivery is automated, requiring FSRA authorisation.
Question 6: The DFSA's 'Recognised Members' regime for Nasdaq Dubai allows:
- Licensed firms to become trading members of Nasdaq Dubai after meeting membership requirements (Correct answer)
- Any DIFC entity to trade freely on Nasdaq Dubai without registration
- DFSA itself to act as market maker on Nasdaq Dubai
- Non-DIFC firms to trade on Nasdaq Dubai without any regulatory oversight
Correct answer: Licensed firms to become trading members of Nasdaq Dubai after meeting membership requirements
DFSA Authorised Firms meeting Nasdaq Dubai's membership criteria can become Recognised Members and access the exchange to trade on behalf of clients or for their own account, subject to exchange and DFSA rules.
CISI UAE FRR DIFC & ADGM Regulatory Environment 6
Under DFSA regulations, a 'Passported Firm' from another recognised jurisdiction can: